The World Bank has suspended loans to Cambodia until its government resolves a dispute over the evictions of thousands of poor landowners in the capital, Phnom Penh.

The bank's country director, Annette Dixon, said the institution was encouraging the government to provide on-site housing for the remaining residents of Boeung Kak Lake. "Until an agreement is reached, we do not expect to provide any new lending to Cambodia," she said yesterday.

The low-income residents along the lake are being evicted to make way for commercial development.

The World Bank had funded a $24m (£15m) programme to strengthen property rights. In March, Bank inspectors acknowledged that the programme was flawed and demanded the government halt evictions and compensate landowners.

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